Allstate close to selling annuity book to FGL Holdings: sources

FILE PHOTO: An Allstate insurance office is shown in San Francisco, California February 10, 2010. REUTERS/Robert Galbraith/File Photo

NEW YORK (Reuters) - U.S. insurer Allstate Corp has entered into exclusive talks to sell a book of insurance policies from an area where it no longer generates new business to smaller peer FGL Holdings, people familiar with the matter said on Wednesday.

Should the deal go ahead, it would be the latest transaction involving run-off books by insurers, who have been offloading these existing policies to free up cash to help write new business.

The business for sale is expected to be valued at between $2.5 billion and $3 billion, the sources said, cautioning that a deal is not certain and asking not to be identified because the matter is confidential.

Spokespeople for Allstate and FGL Holdings declined to comment.

The book of business which Allstate is seeking to sell includes a selection of annuity products, as well as structured settlement policies, the sources said.

A number of players, often backed by private equity firms, have emerged in recent years to acquire such blocks, believing they can earn good returns from administering the policies in a more efficient way than traditional insurers.

FGL Holdings was formed by ex-Blackstone Group dealmaker Chinh Chu and William Foley, an insurance veteran who is non-executive chairman of Fidelity National Financial and also the owner of the Vegas Golden Knights ice hockey team. Both Chu and Foley currently serve as co-executive chairmen of FGL.

FGL has made a number of internal changes in recent months. Christopher Blunt was named chief executive in December, at the same time that FGL announced it was implementing a number of initiatives aimed at boosting shareholder value.

It announced on Tuesday that Chief Financial Officer Dennis Vigneau would retire at the end of 2019.

Reporting by David French in New York; Editing by Susan Thomas